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Exclusive: Tequila, Cognac, Premium Bourbon, Cocktails To Drive U.S. Spirits Market Growth Through 2025

October 7, 2021

After four straight years of accelerating gains, the spirits industry’s momentum is projected to decelerate this year, down to 2.5% growth—according to The U.S. Spirits Market: Shanken’s Impact Databank Review & Forecast, 2021 Edition—to an estimated total of 261.2 million 9-liter cases by year-end. Stocking up due to the Covid-19 pandemic bolstered the off-premise sector last year, leading to an impressive 6.9% rise in overall spirits industry depletions, and the total market is expected to register its 26th consecutive annual volume gain in 2021. But while this year’s expected growth pales in comparison to last year’s, total spirits consumption in 2021 is still projected to be fully 10% higher than 2019 levels, prior to the pandemic.

Looking ahead even further, the lingering negative impact of the pandemic and continued erratic economic conditions, as well as fierce competition from other drinks sectors—primarily hard seltzer and other flavored malt beverages—will cause the overall spirits market to keep slowing, according to the 296-page report. The spirits industry registered a solid 2.7% annual growth rate from 2000 to 2010, and a further 2.9% average increase from 2010 to 2020, but will slow to 2% annual growth from 2020 to 2025. From a broader perspective, per-capita spirits consumption has increased steadily since its declines during the global financial crisis more than a decade ago, and spirits will continue to siphon share from the beer and wine sectors.

Tito’s vodka from Fifth Generation remains the largest-selling spirit by volume in the U.S. but Hennessy Cognac led all brands by retail value last year, according to Impact Databank. Including flavors and other variants, Diageo’s Crown Royal whisky joins Tito’s and Hennessy as the only spirits brands to exceed $2 billion in retail dollar terms in 2020. And even after shedding many lower-profit brands in recent years, Diageo continues to outpace all other spirits marketers by a healthy margin, in both volume and value.

Among the major spirits segments, pre-mixed cocktails—including low-proof, spirits-based RTDs—exploded last year, and are expected to continue expanding until at least 2025. Tequila, Cognac and flavored whiskies also posted double-digit gains last year, according to Impact Databank, and are expected to outpace other spirits categories the next five years. Other high-profit segments, such as the premium-plus sectors of Bourbon, gin, rum and liqueurs are also projected to post solid gains through 2025.

For more information and to order The U.S. Wine Market: Shanken’s Impact Databank Review & Forecast, 2021 Edition as well as other exclusive Shanken reports and publications, click here.—Juan Banaag

U.S. Spirits Market: Category Projections Through 2025
(millions of 9-liter case depletions)
Category/Type 2020 2025 AACGR1
Vodka 80.6 83.1 0.6%
American Whiskey 31.4 37.5 3.6%
Tequila 21.3 26.5 4.5%
Pre-mixed Cocktails2 15.3 21.8 7.3%
Brandy/Cognac 15.3 19.0 4.4%
Irish Whiskey 4.6 5.5 3.5%
Other Spirits 86.2 88.2 0.5%
Total 254.7 281.5 2.0%
1 Average annual compound growth rate.
2 Includes low-proof RTDs.
3 Addition of columns may not agree due to rounding.
Source: IMPACT DATABANK © 2021
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